You May Already Be a Reseller

• By theWHIR.com , August 25, 2004

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You May Already Be a Reseller

By Max Smetannikov

This story appeared in the July/August 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.

August 25, 2004 -- (WEB HOST INDUSTRY

REVIEW) -- By day, George Roberts is a systems analyst for a Fortune

500 company. By night, he is the chief executive, chief geek and head

janitor at Interjuncture (interjuncture.com), a one-man Web hosting firm serving 40 customers and 150 Web sites.

In the offline world, Roberts is what

you'd call a regular guy. He likes computers, has a wife and two kids

and a swarm of pets — a dog and two cats. In the hosting arena, he is a

part of a growing group of individuals that are joining Web designers

in one of the hottest trends in Web hosting.

Roberts occupies a range of expertise,

investment and time that many hosting customers already occupy. Many of

them Web designers and hobbyists, these users may be involved in

managing several hosting accounts and, more importantly, may already be

doing the work of a Web hosting provider.

This growing segment of advanced Web

hosting customers is a potential goldmine for larger hosting firms,

which already have the relationships, already provide all the back-end

services and need only to help these customers make the potentially

lucrative transition into becoming Web hosting resellers.

The unique selling proposition of this micro-hosting reseller set—lots

of hand-holding.

"Because I am a one-man show I am hands on and talk to customers a lot," said Roberts. "With me, you go straight to the top."

Roberts doesn't advertise his services.

All he does by way of marketing is list Aurora, Illinois-based

Interjuncture on Web hosting directories and rely on word of mouth. His

expenses amount to an account with a hosting company and some outlays

for software. His pricing strategy is mid-range — Roberts doesn't go

for volume but figures his premium makes the difference for customers

who need personalized services. This means that his shared hosting plan

— Interjuncture's least expensive offering — costs $4 a month as

opposed to $1 a month.

Interjuncture wouldn't be operational if

it weren't for three tools. First, a control panel allows Roberts to

set up accounts, add services, maintain customer profiles and initiate

billing via a single Web interface. Roberts uses Ensim (ensim.com),

though other control panels are available. Second is his billing

software. Roberts doesn't track usage by end users, doesn't estimate

billing and doesn't lick envelopes when mailing out bills — instead, he

runs his business on ModernBill (modernbill.com),

a system designed with Web hosts in mind by Modern Gigabyte. Finally,

Roberts outsources his technical support and customer service. Yes, he

is available for his customers, but the flood of inevitable mundane

questions is handled by a system called eSupport, from Kayako (kayako.com).

Together, these three tools allow Roberts to run his Web hosting business in as little as 10 to 15 hours a week.

"This is not a hobby, since there is time

and money involved," he says. "However it is nice to take something you

get lots of satisfaction from and make it into a business."

Web hosts and vendors that enable

businesses like Interjuncture have taken notice of this new trend.

Ensim, the control panel maker that supports Interjuncture, has

launched an entire program addressing the needs of the ultra-small Web

hosting resellers. Called Ignite and launched this spring, the program

aims to popularize Ensim tools not just with a handful of large hosts,

but with a wider universe of Web hosting providers.

Ensim's research indicates there are 44

million domain names in the US alone, a stunning number when you

consider how operators like Roberts are making hosting probably one of

the most competitive industries under the sun.

Accidental Web hosts have been part of

this industry as long as there was Web hosting. Some of the very first

Web hosts were Web designers who sought to streamline their client

relationships by giving access to their Web servers so that customers

could view their sites as an end user would see them. Another group

that has long been finding its way into Web hosting is network and

systems consultants who help clients develop sites as part of larger

contract engagements.

It wasn't until relatively recently that

Web hosting became automated and sophisticated enough for individuals

like Roberts to be able to provide quality service on a truly part-time

basis — in off-hours from his job, and without requiring him to spend

too much time away from his family.

Ignite has been specifically structured

to address the needs of this new wave of Web hosts. The big idea was

that the very small hosts neither have the time nor the money to

negotiate good supplier deals from third parties. Through Ignite, Ensim

does that for them, setting them up with a payment merchant system, an

SSL certificate for transactions, an email marketing campaign engine

and a search engine optimization tool. Interjuncture is an example that

these tools can be optional, and if all a host wants is a control

panel, a control panel it gets. The magic of this program is that there

is no money up front. Ensim gets a portion of each sale instead, or a

referral if a third party's product is sold.

"We just launched this program a couple

of months ago and already have 700 sign-ups," says TJ Dupont, Ensim's

director of product marketing.

Web hosts view this phenomenon as another

entryway into the 5 million-strong SMB market in the US. Several

companies have staked out their claims for the very-small business

market, including Interland (interland.com), Hostopia (hostopia.com) and Alabanza (alabanza.com).

Franc Nemanic, founder and president of Hostopia, defines this market

of part-time hosts as companies run by one or two individuals,

supporting between 150 and 200 sites.

Hostopia's offering for this kind of user

provides, not surprisingly, outsourced billing services and tech

support. But the future of this business is not with more automation,

says Nemanic, but with helping these resellers better define and

address their niches as well as develop more sophisticated offerings.

Applications are the next frontier for

the likes of Interjuncture, with hosted Outlook and spam filters

leading the way. Helping resellers better define their market is a more

complex problem, in Nemanic's view.

"This is a segment of the market looking for a franchise concept," he

says.

Indeed, if entrepreneurs like Roberts are

all buying essentially the same automation and penetrate their

communities by making them franchisees? Nemanic is still pondering the

idea of charging for the brand, however it's easy to see where he is

getting the idea — his local office supplies store.

Staples is now offering Web hosting along

with copying and ink jet paper. And if that seems like a bit of a

stretch, consider that Costco is doing the same — continuing with the

bulk-shopping motif in cyberspace. Two industries where the franchising

of Web hosting services would be especially effective, Nemanic says,

are real estate firms catering to their own agents; and dentists.

Brand building works the other way around

too. Web hosts have an uncanny ability to come out from nowhere and

establish themselves as a go-to brand in a niche industry. Consider

Ink21, a customer of Hostopia. The name probably doesn't ring any bells

with anyone who doesn't speak Cantonese, but the firm is one of the

most popular Chinese-American Web hosts.

"Ink21 caters to Chinese entrepreneurs on

the West coast, and is good in catering to this ethnic market and

lifestyle," says Nemanic.

Advances in software and services have

blurred the line between the sizable hosting customer and the small

hosting provider and all-but-eliminated the barriers to starting a

small reseller hosting business.

The challenge, now, is for the hosting providers and software vendors

that are already dealing with these customers to make it known how

close they already are to operating reseller hosting businesses of

their own.

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